Sanusi's N5000 note
NaijaRock
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Posted by Felix Okoli on August 28, 2012 at 04:03:03:
It's in the news again that our ever ambitious CGN governor, Mallam Sanusi has plans to introduce a higher denomination of currency in the value of N5000 per note. It is said that the new N5000 note would contain the faces of three prominent women in Nigeria's history. Well good idea from Sanusi for honouring women but do we really need another higher currency in a time of inflation, after Jonathan's fuel subsidy removal and in the midst of a violent Nigeria? Already there are fears that this would lead to hyperinflation as all other previous higher currencies have historically done in Nigeria, when introduced.N5000 note? For what? According to the experts, they say it is to make it more affordable to print money and save currency management costs. They also plan to make lower currencies like N10 and N20 into coins. Anyway, thank God the Senate has suspended the idea for now as it was already causing confusion in the country. I still wonder if the CBN is really committed to its goal of a cashless Nigeria by gong ahead in introducing a higher denomination for the naira. Actually, if they were serious about having more Nigerians carry less cash and jettison the age of Ghana must go bags, then the best approach would have been to follow the idea borught by the CBN former governor Professor Charles Soludo who wanted to re-denominate the naira notes such that N1000 would be like N100 and N100 would be N1.When in 2010, Soludo brought the plan to redenominate the naira so that at least $1 would be worth about N1.50 as was similar in Ghana, through a redenomination process, President Yaradua cancelled the idea in a statement read by the Attorney General, Michael Aondoakaa, citing the fact the Soludo went contrary to Section 19 and 20 of the CBN act for failing to get an approval from the President in writing. If that policy had been allowed to sail, at least we would have seen a stronger naira and less cash really carried by people but with CBN's plan to introduce a N5000 note, there is a greater likelihood of holding onto cash by people rather than banking it.Think of it this way, someone who has a bundle of N5000 would be holding up to N500,000 and two bundles would be worth N1m. So think of it, If someone can carry N1m in his coat pocket or Agbada while he goes around, why would he want to go to a bank?Most Nigerians from experience don't really like keeping their money in the banks because of lower interest rates as well as delay in having access to their cash. Most people like holding on to cash for business motives and putting it in a bank can be a lot of trouble. In fact people who keep their money in the bank don't really do it because they are concerned about security but rather convenience. Now if one has bundles of N5000 notes, it would be more portable to carry N1m around rather than transferring from bank to bank, amidst bank charges or ATM thieves.So it would be much easier to carry cash around if the new CBN's plan to introduce the N5000 note sails through. It would be easier to carry cash then than if it was pegged at the N1000 we already have. Besides, it would also be a waste of public funds printing new notes and introducing coins. Afterall, the story we hear is that Nigeria is cash strapped and our trade balance with other countries is not so good.If the CBN and Sanusi are really looking for worthy projects to execute, then they should do something about providing soft loans for small businesses and reducing the interest rate on loans. That could help our economy much better rather than bringing another inflationary policy.
Comments:
It's in the news again that our ever ambitious CGN governor, Mallam Sanusi has plans to introduce a higher denomination of currency in the value of N5000 per note. It is said that the new N5000 note would contain the faces of three prominent women in Nigeria's history. Well good idea from Sanusi for honouring women but do we really need another higher currency in a time of inflation, after Jonathan's fuel subsidy removal and in the midst of a violent Nigeria? Already there are fears that this would lead to hyperinflation as all other previous higher currencies have historically done in Nigeria, when introduced.N5000 note? For what? According to the experts, they say it is to make it more affordable to print money and save currency management costs. They also plan to make lower currencies like N10 and N20 into coins. Anyway, thank God the Senate has suspended the idea for now as it was already causing confusion in the country. I still wonder if the CBN is really committed to its goal of a cashless Nigeria by gong ahead in introducing a higher denomination for the naira. Actually, if they were serious about having more Nigerians carry less cash and jettison the age of Ghana must go bags, then the best approach would have been to follow the idea borught by the CBN former governor Professor Charles Soludo who wanted to re-denominate the naira notes such that N1000 would be like N100 and N100 would be N1.When in 2010, Soludo brought the plan to redenominate the naira so that at least $1 would be worth about N1.50 as was similar in Ghana, through a redenomination process, President Yaradua cancelled the idea in a statement read by the Attorney General, Michael Aondoakaa, citing the fact the Soludo went contrary to Section 19 and 20 of the CBN act for failing to get an approval from the President in writing. If that policy had been allowed to sail, at least we would have seen a stronger naira and less cash really carried by people but with CBN's plan to introduce a N5000 note, there is a greater likelihood of holding onto cash by people rather than banking it.Think of it this way, someone who has a bundle of N5000 would be holding up to N500,000 and two bundles would be worth N1m. So think of it, If someone can carry N1m in his coat pocket or Agbada while he goes around, why would he want to go to a bank?Most Nigerians from experience don't really like keeping their money in the banks because of lower interest rates as well as delay in having access to their cash. Most people like holding on to cash for business motives and putting it in a bank can be a lot of trouble. In fact people who keep their money in the bank don't really do it because they are concerned about security but rather convenience. Now if one has bundles of N5000 notes, it would be more portable to carry N1m around rather than transferring from bank to bank, amidst bank charges or ATM thieves.So it would be much easier to carry cash around if the new CBN's plan to introduce the N5000 note sails through. It would be easier to carry cash then than if it was pegged at the N1000 we already have. Besides, it would also be a waste of public funds printing new notes and introducing coins. Afterall, the story we hear is that Nigeria is cash strapped and our trade balance with other countries is not so good.If the CBN and Sanusi are really looking for worthy projects to execute, then they should do something about providing soft loans for small businesses and reducing the interest rate on loans. That could help our economy much better rather than bringing another inflationary policy.
Comments:
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Re: Sanusi's N5000 note
Posted by kkareem
on September 03, 2012 at 04:43:59:
it is better for the president to check the cbn governor,for this restructuring cost should have been channeled to a better projects such as providing soft loans to the small and medium scale business.etc